Time is of essence
This phrase is used in everyday parlance, but carries tremendous significance in contract law. In a contract relating to the sale of land or for construction or manufacturing of goods, the parties must expressly state that time is of essence, so as to make sure that performance of the contract is obtained at the time or within the time stated in the contract. Where a time is given with the phrase and a party fails to perform the contract or delays action at the time or within the time stated, that party would be in breach of that contract. So if the contract states a date, for example 3rd December 2019, time is of essence, the contract must be performed on or before the date.
One party agreed to sell land to another. The party did not pay as required. Then that party is in breach of the contract, because that party failed to pay the purchase price. The party affected can seek specific performance or recovery of possession of the land, or other reliefs. If the party was already occupying the land the other party could claim damages. If there is a “time of essence” phrase the party can recover once the time has passed. It does not mean that the party will lose without the words. Depending on the situation the claimant can still win provided there was reasonable time to pay.
Reasonable time to pay is supported by precedent. Where there is no special time of payment stated in the contract, the court will consider the length of time involved and decide whether there was reasonable time to perform the obligation.
Chitty on Contracts explains it in this way. “Where no precise time for performance is specified and where a party to a contract undertakes to do an act, the performance of which depends entirely on himself, and the contract is silent to the time of performance (or merely uses indefinite words such as “with all dispatch”) this implies an obligation to perform the act within a reasonable time having regard to all the circumstances of the case. But where the act to be done is one in which both parties to the contract are to concur, the implied engagement is not that the act shall be done within either a fixed or a reasonable time, or within the time usually taken, but that each shall use reasonable diligence in performing his part.”
This is an important phrase used in contract law, in particular, with real estate. A party using it asks the court to force the other party to perform the contract rather than award damages. It is because monetary damages would not be enough to compensate for the breach of contract. It is presumed that monetary damages would not be enough to compensate for a breach of contract for real property. Real property is considered to be unique. Where a contract is made to sell land and the seller decided afterwards not to convey, the court can order specific performance.
The terms of the contract must be certain. There must be a seller and buyer. The price to be paid, the time and manner of payment and a property to be transferred must be clearly stated. The buyer must have given adequate consideration. The claimant must have performed his side of the bargain and the defendant must have breached the agreement.